Gator rushes to court over ad technology

A software company at the center of a growing dispute over the use of pop-up ads has sued the Interactive Advertising Bureau to protect its right to sell ads that can cover those on other Web sites.

Gator, based in Redwood City, Calif., filed a lawsuit late Monday in California federal court against the IAB to "protect the right to utilize Gator's newest advertising vehicle, the Companion Pop-up Banner." Gator's service delivers pop-ups that can obscure banner ads sold on some Web pages.

The IAB, which represents several major content sites that rely on ad revenue, has been sharply critical of Gator's software.

In the suit, Gator seeks declaratory relief and punitive damages against the IAB's "malicious disparagement" of Gator's business under the Lanham Act, the Declaratory Judgment Act and California state and common laws.

According to the suit, which was filed in the Northern District of California, Gator charges that the IAB "falsely asserted that certain aspects of (its) service are unlawful, unethical and deceptive."

Gator also charges the IAB with violating trade libel under California law, disparaging its service and costing the company lost sales. It seeks punitive damages.

The move comes amid open disapproval from the IAB about the company's ad-delivery software.

As previously reported, IAB Chief Executive Robin Webster said the group's board of directors is demanding that Gator stop its practice of selling ads designed to intentionally block those sold on its members' Web sites. Webster also said that the IAB is considering pressing the issue with the Federal Trade Commission.

IAB spokesman Stu Ginsburg said Tuesday that the organization had not seen the Gator suit and could not comment on it.

Which ads will you see?
The dispute centers on Gator's ad-delivery software, which displays online ads in two creative but controversial ways. Under one method, a person who is visiting a flower-delivery company's Web site, for example, might receive a so-called pop-up ad for a rival site. In addition, Gator is able to paste ads of the same dimensions on top of the banner ads being used on popular sites such as Yahoo. Critics have compared the technology to intercepting Time magazine as it is mailed to readers' homes and gluing a new ad over the back page.

CNET Radio Robin Webster, chief executive of the Interactive Advertising Bureau, says her group is demanding Gator put an end to its ad blocking practices. (4:53)   • Play clip Gator CEO Jeff McFadden joined CNET Radio's Rose Aguilar to discuss the criticism his company has been recieving over its ad-block software. (7:23)   • Play clip

Gator's ad-delivery software is included in a helper application that manages passwords and user IDs, and offers price comparisons. Gator says it has been installed on more than 8 million computers and fulfilled more than 100 million requests for help last month.

The IAB's Webster said in an interview Monday that the company's advertising is violating trademark and intellectual property rights of its member companies.

"By placing ads on other companies' Web sites without their authorization, this deceives the consumer by visually altering the Web sites; it falsely suggests some affiliation between the Gator ads and the host Web site, and it interferes with the revenues of the Web sites," she said.

"This is pretty serious stuff, and we want them to stop," she said.

Gator's suit is partly a pre-emptive strike to prevent the IAB from pursuing any legal action of its own.

"We're not going to be bullied here," Gator Chief Executive Jeff McFadden said in an interview. "I can understand why the IAB, who represents our competitors, doesn't like our pop-ups, but their claims about its legality are utterly baseless.

"The danger to the IAB's online publishers isn't Gator--the danger is irrelevant advertising. Millions of Web users are already ignoring 99.8 percent of current banners ads, and publishers are perishing at an alarming rate."

He added that his company's targeted ads could improve results. "So we refuse to allow the IAB to falsely claim that pop-up banners are illegal or to interfere in any way with our advertisers' right to deliver relevant advertising, or our consumers' right to decide for themselves what is or isn't displayed on their own computer screens," he said.

Gator's lawyers added that consumers are told before installing the program that they will receive advertising based on their surfing habits, putting the company on solid legal ground. Furthermore, the company asserts that the pop-up windows do not modify the content of Web pages or browser windows. Consumers can modify how they receive the ads and choose to disable the technology.

McFadden said that he is interested in finding an amicable solution with the IAB. Webster has also said she is interested in a negotiated resolution.

In the event a solution cannot be reached, the IAB has said it may consider filing a complaint with the FTC charging that Gator is engaging in unfair business practices. Webster added that an IAB member could file a lawsuit against the company. In such an event, Webster would rally support from other members to get behind a lawsuit.

Webster sits on the IAB board of directors. Other members include Jeffrey Mahl, president of Gemstar-TV Guide International's Media Sales Group; About.com Chief Executive Scott Kurnit; and Shelby Bonnie, chief executive of CNET Networks, publisher of News.com.

"I'm not going to stand by and let the IAB say that our products are illegal. Their claims are ridiculous: Who's to decide who's content is authorized? All pop-ups obscure content. Microsoft Outlook obscures content, and that's not illegal," Webster said. "The consumers get to decide which Web site they want to visit and what software (applications) they want to run on their computer."